Emma Thompson's face is rather like a stage: bare, receptive. She brings event to it. She has a spark that is close to beauty but not the same thing. It is a relief to see her looking like herself, strolling about in jeans, because in her tremendous new film for children, Nanny McPhee, she is transformed into the ugliest character she is ever likely to play. Nanny McPhee has two warts as large as sultanas, a disconcerting tooth that descends over her lower lip, a 'monobrow' that lies like a dead millipede across her forehead and a nose like a malformed spud.

It is a mask without much slack - and Thompson has perfected the art of the straight look. Even her eyes seem unfamiliar: piggy, tiny, fixing her charges with a strange blue stare. Her body has been reconstructed, too. It is as vast as a Victorian armchair on the move and dripping with jet. She is at once benign and funereal, an unsettling, sinister combination. Only her voice is attractive: low and supernaturally calm.

We are in the kitchen of the house in West Hampstead where she lives with actor Greg Wise and their five-year-old daughter, Gaia. The house looks small from the front but inside extends in all directions. And I have never seen so many saucepans in one kitchen. 'Take a sniff,' she says, shoving a packet of German tea under my nose: an intense, chocolatey smell. She makes us a small pot. I keep registering her voice: the odd combination of posh and demotic, with an ironic edge. I look through the glass doors and admire the garden and at once - warm, brisk, relaxed - she takes me out into the damp morning to inspect Greg's vegetables: his tomatoes which he ingeniously 'sun dries' in the oven, his beans. It is a pleasure to stray but I must not allow myself to be led up the garden path.

Back at the kitchen table, the temptation to gossip is compounded by the fact that I feel Thompson is almost a friend (we were contemporaries Camden School for Girls in North London; my mother taught her English). And that familiar voice - so many Camden girls spoke a little like Emma Thompson. Yet, actually, I didn't know her then and nor do I now. Nanny McPhee is Thompson's pet project; she's been working on it for nine years and wrote the screenplay. It is based on Nurse Matilda by Christianna Brand (1964). I still have my copy: Edward Ardizzone's illustrations make Nurse Matilda look more like a doleful lump of coal than 'the ugliest person you ever saw in your life'.

It is Thompson's triumph to have reinvented her as hyperbolically grotesque and magical, with help from Oscar-winning Peter King (who designed the trolls in The Lord of the Rings) and from a sparky alpenstock that can produce thunder, lightning, gold sparks and improved behaviour. So, move over, Mary Poppins. How would the two nannies have got on? Thompson thinks Poppins might have been sniffy: 'She'd be defensive because Nanny McPhee is almost a Buddhist: still, unegotistical. She would never describe herself as practically perfect in every way.'

Nor would Thompson. It is her imperfection - her lack of conventional beauty - that has made her successes so keenly enjoyable. She has been rewarded (with two Oscars and countless other awards) not for glamour, but for transcendent acting. She has specialised in parts for which her shorthand is 'good woman in a frock'. Margaret Schlegel in Howards End, Elinor Dashwood in Sense and Sensibility, Karen, the Prime Minister's sister in Love Actually. The anguished scene in which Karen discovers her husband's infidelity is the most memorable in the film. But according to film critic David Thomson, casting directors are missing a trick: 'She shouldn't play any more wronged wives. She should be a criminal wife, so attractive that no man could ever blame her or give her up.'

Thompson's appearance is a complicated matter. After seeing Nanny McPhee, my youngest son wanted to know whether she minded playing someone so ugly. 'Oh no. So not! Tell him I mind having to look pretty, that's what I mind, because it is so much more of an effort. Before going on Jonathan Ross's show, I tried on every single thing in London.' Is she vain? 'My appearance has changed a lot over the years, but it has far more to do with how I feel about being a woman. I've never thought of myself as vain. When I was at Cambridge, I shaved my head and wore baggy clothes. What I did was to desexualise myself. It was partly to do with the feminism of that time: militant and grungy. That's all changed now, though I don't think it is liberating to get your tits out. I don't hold with that. But I am much more comfortable with being a woman now than I was in my twenties.'

I assume she is about to attribute this to her happy second marriage (her first, to Kenneth Branagh, didn't last) or motherhood (after the rigours of IVF) or to the self-confidence of middle age (she is 46). I am wrong. 'Maybe it is because I identified so very much with my father and because of his early death, he was held, as it were, in amber for me. I suppose part of me wanted to reclaim him by becoming him.' She defines herself through family: her mother is actress Phyllida Law. Her father, Eric Thompson, was the creator of The Magic Roundabout. Perhaps, with Nanny McPhee, a new classic for children, she is becoming him once more.

The other point she makes about appearance is this: 'I can do invisible.' She has lived in West Hampstead all her life: 'Everyone knows me; they don't look twice.' If she were Gwyneth Paltrow, she says, dressing down wouldn't work. But Thompson travels on the tube without being recognised: 'I dress down to a tragic, possibly-in-need-of-social-services-assistance look.' But next year, she will play 'someone glam' in a romantic comedy she and Nick Hornby have been working on for five years. 'I have to be really pretty. I've been scared of it, but now think: bollocks to it, come on.'

She aspires to be as calm as Nanny McPhee. 'But when I lose my temper, I find it difficult to forgive myself. I feel I've failed. I can be calm in a crisis, in the face of death or things that hurt badly. I don't get hysterical, which may be masochistic of me. But in small matters, I am not calm at all. My worst quality is impatience.' I think of Christopher Hampton's film, Imagining Argentina, howled down at Venice. Thompson gave no outward sign of being hurt by its reception.

Watching Thompson act, it is possible to suspend disbelief. She doesn't seem to be 'acting' at all; every part she plays seems to come from somewhere deep inside. It is this that makes her a great actress. 'I am an instinctive actress,' she says. 'I don't have technique because I never learnt any. I do the cerebral bit before I start. Then I just let it be. I allow whatever rises to rise naturally. You are tricking your subconscious.' She never watches herself on screen when making a film. She tried it in 1987 with Fortunes of War and was appalled. 'I work from the inside out.'

Off stage, Emma Thompson doesn't put on any acts. She is direct, the ironic tone misleading. She is a human-rights campaigner, working for Alone in London, Action Aid in Africa (helping HIV and Aids sufferers) and for Helen Bamber's Foundation for the Care of Victims of Torture. Refugees 'physically wrecked by deprivation and torture' may visit a therapy room in Thompson's nearby office. She gets sneered at by those who think actors should confine themselves to acting, but doesn't rise to it. 'If you are involved in a charity,' she argues, 'you need to make sure you know what you are talking about.'

I ask about Action Aid and she replies with a detailed account of Uganda, until recently 'a flagship on public consciousness on HIV but now being dismantled. Janet Museveni, the President's wife, has just said that condoms are not safe. It is a disaster'. She has been to Ethiopia, Mozambique and Uganda, but for now she is putting her travels on hold. 'I can't travel so far for so long. I miss Gaia too much and she misses me.' She thinks it not fair on a 'small person'.

She does her best for her family (she played Professor Sybil Trelawney in Harry Potter and the Prisoner of Azkaban to please her daughter). 'I have periods of intense activity, then stop. My ideal is to work hard in the morning until I pick Gaia up from school. Just putting an empty square in my diary seems to make a space in my head, too. You have to be very good at saying no.' And are you good at it? 'Yes,' she says, almost ruefully, 'I am.'

She has learnt the hard way. Last year, she 'over-extended' herself, became depressed and ill. When it gets too much, she cancels everything. She'll 'not do anything except be at home. Play games. Light a fire. Do quiet things that don't involve anything public at all. Cook a meal - very cheering. Not answer the phone. Close the doors'. Or, she disappears. In the school holidays, she goes to her mother's house in Argyll (where she spent summers as a child) and where 'our mobiles don't work and even the landline sounds crackly. When we are there, we sink back into the ground like old potatoes.'

Is the Camden girl still onboard or did she climb off the school bus long ago? 'I am still very much connected. My best friend from school is still my best friend; she is an educational psychologist in Durham. We still sit and giggle insanely about stupid things.' She doesn't think she has changed much. The problem is other people's perceptions of her. 'It is tricky; you have to dance quite cleverly around it. But I have spent many years and expended far too much energy on apologising. I am who I am and there is nothing I can do about that.'

Before I go, I ask to see Nanny McPhee's magic alpenstock (she and Gaia play with it). I take it from her and tap it on the floor. Nothing happens. I hand it back. Emma Thompson has what she needs. No airs. Lots of grace. She doesn't need its support.